There are numerous meanings that could be related to the acronym of CPC. Below we have explained what does CPC stand for and the thorough details of how it works.
So what does CPC stand for?
What many individuals in the business world never truly understand is the definition of CPC, especially considering that there are indeed many acronyms, but in this case, we are referring to Cost-Per-Click.
Now comes the question of what does it mean. CPC, as mentioned before, is a three-letter acronym primarily used in online marketing as well as advertising. It refers to being simply a measure of how much an advertiser is paying every time an ad gets clicked.
This should not be confused with PPC (Pay-Per-Click) which refers to a type of advertising in which the advertiser pays for each click on their ads and can come in the form of a daily fixed budget with the value of each click fluctuating based on certain factors such as competition and search volume.
How Is CPC Calculated?
When it comes down to calculating the CPC it is usually done by the dividing up of the total cost of clicks by the total number of clicks. In other words, your average CPC is based on your actual cost-per-click, which is the actual amount that you are charged for a click on your ad. One thing to always keep in mind is that your average CPC may just so happen to be different from your maximum cost-per-click, which is the highest amount that you are meant to pay for a click.
What Is The Average Cost Per Click in AdWords?
What a lot of people do not realize is that when it comes to cost-per-click it is mainly used in click-based advertising, particularly Google AdWords. Now when it comes to knowing the average cost-per-click on Google AdWords, it would be between $1 and $2 on the search network whereas the average cost-per-click would be under $1 on the display network.
The Importance of Cost Per Click in Search
Advertising Cost-Per-Click is a lot more important when it comes to Search Advertising more than most people think. It is important primarily because it is the number which justly determines a paid search campaigns’ financial success as well as exactly how much AdWords will cost for you.
What you get back from investing, as in are you paying too much or paying too less for each action will, in the long run, will be determined according to exactly how much you are paying for clicks as well as the quality being received.
With this knowledge, it is beyond important to take into consideration the cost-per-click in terms of its cost and value. The one thing that you have to keep a sharp eye on is being able to ascertain and focus on clicks that are both inexpensive as well as valuable.
Lowering CPC While Maintaining Value
One thing people need to keep in mind is that they need to lower the cost per click while still being able to maintain its value. One must try to raise what is called the Quality Scores.
For example, currently, accounts involved with Google with the quality scores of 6 or higher are usually given a decrease in CPC -between 16% to 50% as compared to accounts with a quality score of 4 or lower, where usually a percentage increase of between 23 to as high as 400%.
This can also be done by increasing your reach by dwelling in and discovering new relevant and valuable clicks. This will help the distribution of your budget improve significantly. This should be done with the elimination of irrelevant or overpriced clicks all at the same time.
What can also help is redefining how your reach is and this can be done by making sure to designate negative keywords which can allow for the filtering of any unnecessary searches.
With these new keywords being integrated and the negative keywords being eliminated, it allows one to be able to focus on keywords that perform well and are primarily relevant to the business and the overall outcome will be that quality scores will be positively affected. In the end, a low CPC can guarantee proper business success.
How CPC Advertising Works
Indeed You have heard everything about what CPC is but now comes the real question of how exactly does it work. Let us take for example Google AdWords. What happens is that business bids on various keywords on a cost per click basis.
When someone clicks on a particular ad, the business finds itself paying a small amount of money, based on the cost per click bid that was made. Now because every keyword is different, each one has a different set of bids that are being made by various people.
Picture it as a sort of auction for ad placement and each keyword is involved in it. Comprehending how the whole system works can be a bit difficult, but overall on a general basis, it mainly works as such. The higher the bid leads to a higher placement.
In a nutshell, the more people keep clicking on your ad, the more money you have to pay.
With most advertising networks, a daily budget can be set up according to how much you spend and therefore, these networks would keep you from spending any more than your budget is.
Make More Money With CPC Ads
For a publisher running CPC ads, the higher the CPC rates the more money you will earn. But how can you make even more with Google AdSense? Start by creating more content that targets keywords with a higher cost per click. While there are many ways to do this using AdSense, the easiest is to apply the power of the Google Keyword Planner.
Although you can’t force Google to display higher-paying AdSense ads, you can focus your own content on higher-paying topics. Once you’ve chosen a keyword, create its page on your website followed by some basic on-page SEO to try ranking for the keyword. This strategy is most effective with long-tail keywords with 3 or more words such as “Windows 7 installation for beginners”.
What Determines Your CPC?
What is it that actually determines your cost per click? When it comes to promoting products and services to a target group of individuals, it always has to involve online advertising especially since it has become the best method.
Ultimately, the price of a dealer’s actual CPC is principally dependent on the result of the auction. Generally, costs are lower than any maximum bid that is dropped because you only have to pay just above the price of whatever ad that is ranked below you. Another factor is seasonality.
Some companies prefer certain seasons to advertise such as Valentine’s Day or Christmas because it allows the opportunity to bid higher because they have the appropriate budget.
It is also because these are what you call High Consumer Traffic Holidays and during this time there is massive competition among marketers which in turn, raises costs.
How Price Impacts Cost-Per-Click
For advertisers running their campaigns via search engines, the goods/services being marketed are the single biggest contributor to CPC. Since most online ad platforms have an auction-based mechanism of operation, advertisers paying more per click have their ads ranked higher.
The higher the price of your product, the more your competitors will be willing to spend more per click. For instance, if you’re selling a $20k product and your site’s sales team is able to convert 1/200 clicks into a sale – i.e. a 0.5% conversion rate, you should consider paying $20 per click on the ad. This way, you spend a total of $4k in ads to acquire a $20k sale; a 5:1 ratio.
Cost-Per-Click Bid Strategies
Here, your goals are the key determining factor. In addition to your current ad campaign settings, below are 3 basic categories of goals to consider:
- If you want your customers to take a direct action when they visit your site when using conversion tracking, use AdWords Smart Bidding to focus on conversions
- To generate more traffic to your site, apply a CPC bidding strategy that focuses on clicks
- To enhance brand awareness, focus on impressions with an endearing message to your customers.
This concludes and gives a general oversight of the inner workings of CPC and hopefully allows for a better understanding of how to use it to your advantage.